Johnson & Johnson to fight $181M legal fees in Ark. Risperdal case

LITTLE ROCK, Ark. (Legal Newsline) - Johnson & Johnson says a $181 million fee awarded last week to attorneys who represented the state of Arkansas in a lawsuit over Risperdal is not reasonable and plans to appeal

"We continue to firmly believe Janssen did not violate the Arkansas Medicaid Fraud False Claims Act or the Arkansas consumer fraud statute, and, therefore, no fees should be awarded," spokeswoman Teresa Mueller said Monday. "The $180 million fee ... is not a 'reasonable' fee. We have appealed the June 2012 judgment and will also appeal this fee award."

Pulaski County Circuit Judge Tim Fox ruled Jan. 31 that Johnson & Johnson must pay $181 million to attorneys from the Houston-based law firm Bailey Perrin Bailey who represented the state in a lawsuit over Risperdal, an atypical antipsychotic medication that a subsidiary of the company developed. The drug is typically used to treat schizophrenia, schizoaffective disorder, the mixed and manic states associated with bipolar disorder, and irritability in people with autism.

In April, an Arkansas jury found that Janssen Pharmaceuticals, which now operates as Ortho-McNeil-Janssen Pharmaceuticals Inc. and is a division of Johnson & Johnson, had minimized risks associated with the drug in a letter sent in 2003 to thousands of doctors in the state.

Assessing a $5,000 fine for each Risperdal prescription added up to a $1.1 billion verdict by Fox. The case was brought by Attorney General Dustin McDaniel through private lawyers he hired.

The $181 million in legal fees is the 15 percent contingency fee that the Arkansas Attorney General's Office had agreed to pay the firm. Bailey Perrin had up to 10 lawyers and five paralegals assigned to the case.

Johnson & Johnson argues that legal fees of $2.2 million to $3.8 million would be appropriate. It says it did not violate Arkansas' Medicaid fraud law and no legal fees should have been ordered by the judge.

The $181 million is the same amount the company agreed to pay out to settle claims over the drug by 37 state attorneys general in August -- not including Arkansas.

"As we presented at the fee hearing in December, the fee awarded represents about $19,700 per hour for each of the outside attorneys and staff who worked on the case for the state, based on our reconstruction of their actual time," Mueller said. "That sort of excessive fee, we believe, is not allowed by Arkansas statutes and is not permitted by the Arkansas and U.S. Constitutions."

A spokesman for McDaniel's office said the ruling wasn't about the fees, but rather the actions of the defendant.

"We are filing a motion for a new trial and, if our motion is denied, we will appeal," Mueller said. "We firmly believe neither the verdict nor the penalty will be upheld on appeal. The penalty was clearly excessive as during the entire period in question the Arkansas Medicaid program spent a total of $8.1 million of state funds on prescriptions for Risperdal."

The Arkansas case primarily dealt with allegations that between 2002 and 2006 the package label and a letter sent to health care professionals failed to adequately disclose risks associated with weight gain, diabetes and increased blood sugar, hyperprolactinemia and cerebrovascular events.

"The main premise of the state's case was that the FDA-approved Risperdal labeling should have had more or different warnings regarding rare or infrequent side effects that may be associated with Risperdal treatment," Mueller said. "Janssen firmly believes it did not violate the Arkansas Medicaid Fraud False Claims Act or the Arkansas consumer fraud statute. Among other concerns, we believe the dissemination of an FDA-approved package insert did not constitute a violation of any Arkansas law.

"The safety issues related to Risperdal are well known and are included in approved labeling. The jury was not asked to decide whether patients were harmed, whether doctors were misled, or whether the State ever paid for a prescription that was not properly written and eligible for reimbursement. Janssen presented abundant evidence demonstrating that the company acted responsibly and in compliance with .all laws and regulations

"Risperdal continues to help millions of patients around the world who suffer from the debilitating effects of schizophrenia and bipolar mania. The State of Arkansas acknowledged that Risperdal was a very important therapy for patients, and the state government did not intend to interfere with physicians' ability to prescribe Risperdal to treat their patients."